Kevin Houser was point man between film studio owner and Saints. Kristen Houser sues film studio owner over construction payments

While more than two dozen Saints football players and coaches fear they may have lost nearly $2 million they entrusted to Louisiana Film Studios owner Wayne Read, they are not the only people in the New Orleans area who say the motion picture executive owes them money.

The financial dealings of the Elmwood film studio that have come to light in the past week show that Read accepted cash payments from the Saints members without returning the tax credit investments or explaining what happened to their money.

After signing a contract for construction work on the studio that he later canceled, he is also being sued by the contractor for $681,000 in unpaid invoices. And St. John the Baptist Parish is still waiting for Read to pay $100,000 that local officials say he owes for bills related to his use of the parish's civic center for a movie production in 2007.

Wayne Read had not applied to state office
for film credits by deadline

In each of the cases, Read's response has been that he expects to raise the money in a short time to cover the debts. In early September 2007, he promised St. John officials he would pay the parish within a week, but parish spokesman Buddy Boe said Thursday the money still has not arrived.

Read has identified himself as the sole owner and executive of the studio, which is operating out of a former Winn-Dixie warehouse and office building in the Elmwood area of Jefferson Parish. Dan Forman, the son of Audubon Institute Chairman Ron Forman, worked for a time for the studio and held the title of president but is no longer with the project.

Several movies have been shot at the site, including work just completed on a Sylvester Stallone action picture, "The Expendables."

Read applied with the state film office to register the studio as a potential recipient for state tax credits. Studio developers can get tax credits at a rate of 40 percent of their expenditures for a project, and those credits can be sold to individuals and businesses who want to use them to offset tax liabilities.

According to that formula, the studio gets cash for its development and purchasers of the tax credits get a bargain rate on a tax-reduction device.

Kevin Houser, who was dismissed Monday as the long snapper for the Saints, became a point man for Read's effort to raise money among the team's current and former players and coaches. In November, 27 men with ties to the Saints -- including coach Sean Payton, quarterback Drew Brees and former quarterback Archie Manning -- paid large sums of money with the expectation that by the end of March they would get back about $1.33 in tax credits for every dollar of their investment.

In correspondence to Houser in December, Read said he planned to spend $12 million to buy the property and $13 million on reconstruction, and that the credits would be delivered by the end of March.

"No risk to you all, " Read wrote.

By the deadline, Read had not even applied for the tax credits from the state film office and had not met at least two important requirements to qualify for them.

'Where is the money?'

In late March, Houser asked Read repeatedly when he could expect delivery of the tax credits. When it became clear there were no credits, Houser wanted the players' original investment back.

In early April, Houser's wife, Kristen Houser, wrote Read saying, "We are very concerned and have been asking for answers to our questions concerning the Saints coaches and players' tax credit agreements with you. So far, your answers to us have been inconsistent. Our questions are very simple: 1) Where is the money??"

Read wrote back that the capital was in "a third party escrow of which I have no direct control." He also wrote that he needed various documents signed to get release of the money. At one point in April, he wrote to Houser that the checks would be arriving "that afternoon, " which did not happen.

According to one of Read's contract documents with a Saints player, the team member's money was intended to be used to assist with the "financing of the studio project land and building acquisition." In return they would get the studio tax credits. Because that property acquisition never took place and the tax credits didn't materialize, Houser thought the players' money should never have been spent and therefore it should have been a simple matter for Read to return the cash.

At one point Kristen Houser became alarmed when she contacted the bank that Read said held one of the escrow accounts, and the bank replied that it had no such account.

Obstacles to credits

While the problems with the tax credits were unfolding, Read had a conflict with the firm 47 Construction -- a company formed in 2007 by Kevin and Kristen Houser. Kevin's uniform number for the Saints was 47.

Last year, Kevin got out of the firm and Kristen partnered with Toni Wendel, a longtime local contractor and former president of the regional homebuilders association. Read met with the new partners and showed them his plans and designs for the studio project, and the firm in December expressed an interest in doing work.

At this point in December, Read was facing two major challenges to getting his studio project qualified for the state tax credits. One was that he had to gain ownership of the property, which belongs to developer George Ackel and a trust for the children of John Georges, a local businessman and former candidate for governor. Read has an agreement with Ackel to buy the building, but has not paid to complete it, both he and Ackel said. Read has been leasing the building and subletting it as a site for making motion pictures.

The other challenge was that Read had to spend at least $22.5 million on the studio project by the end of 2008 to meet a set of state requirements and deadlines for movie studio developments. If he failed to make that level of expenditure by Dec. 31, 2008, his studio would no longer be qualified for the tax credits.

Late afternoon on Dec. 31, Kristen Houser said she got a call from Read saying that if 47 Construction wanted the studio job, they would have to sign an agreement that day in which Read would pledge to give them $26.9 million worth of work over the next three years. Though surprised by the high-pressure offer, the two partners said they met at Wendel's house and agreed to sign a standard contract with Read, who gave them a check for $2.69 million as a retainer, which they agreed to cash at a later time. They made the deal without consulting a lawyer.

Read said last week that his original intent in getting 47 Construction to sign the contract was to try to meet the state's spending threshold before the clock ran out on his deadline. He had hoped he could offer the contract as evidence of expenditures that would keep the project qualified for the credits, he said, but he later gave up that idea.

State film office officials said they have not received Louisiana Film Studios applications for the tax-credit authorizations or any records of the studio's spending. Sherri McConnell, head of state entertainment industry development, said actual expenditures, and not just promises to pay for a contract, must be made if a studio is to meet its spending thresholds.

Many people affected

The construction firm began work in January on the office building portion of the studio, which was rundown from years of neglect and vandals. The building was missing copper fixtures and pipes, and the renovation included mold removal, floor repairs, plumbing and painting. The job included some work in the warehouse-studio portion of the facility.

47 Construction billed Read for nearly $1 million of work and received $300,000 in payments. Read wrote to the firm on April 19 to say he was terminating the contracts and that remaining valid invoices would be paid as soon as possible.

The firm filed suit on June 17 and said Read still owes $681,418.52. About 10 local subcontractors are not getting paid, the partners said, and the episode has caused economic hardships on many people. In the lawsuit, the partners also say that Read had purported to be the owner of the property, which was key to their decision to sign the contract.

The construction partners tried to cash the retainer check, but it bounced, they said. They notified the Jefferson Parish district attorney's office, which is investigating the matter, according to correspondence between Read and the partners. The district attorney's office did not return a call seeking comment.

Read said last week that "the construction was getting ahead of the funding." He said the studio is a viable project whether or not it gets tax credits. In about two weeks, he expects to announce that long-term investors will support the studio and that those who are owed money will be made whole.

"We've been hearing that since March 31, " Kevin Houser said.

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Staff writer Victoria St. Martin contributed to this report.Robert Travis Scott can be reached at rscott@timespicayune.com or 225.342.4197.